Crude oil bulls seeing few clouds on the horizon Crude oil bulls seeing few clouds on the horizon Crude oil bulls seeing few clouds on the horizon

Crude oil bulls seeing few clouds on the horizon

Commodities 5 minutes to read
Ole Hansen

Head of Commodity Strategy

Summary:  Brent crude oil trades back above $70/barrel for the first time in five months while WTI is attempting to re-enter the $65 to $75 range where it spend six months last year before the November to December collapse.

Supporting the latest move higher has been renewed concerns about supplies from Libya at a time where voluntary and involuntary production cuts from Opec and friends already have a firm grip on the market. 

WTI crude oil is attempting a return to its 2018 upper range:
Source: Saxo Bank
This update from Reuters shed some light on what is currently going on in Libya, a country which has seen dramatic ebbs and flows of its oil output since the fall of Gadaffi in 2011. A period of relative calm has seen Libya’s production move back above one million barrels/day. The major production sites are located far from Tripoli, the capital, where fighting is currently taking place. However, the confrontation between the UN-recognised government and Commander Haftar’s Libyan National Army (LNA) has raised the stakes and led to renewed concerns in the oil market. 
The International Monetary Fund yesterday downgraded its global growth forecast to the lowest in ten years while Vladimir Putin raised doubts about Russia’s willingness to support a prolonged period of production cuts. But these developments are unlikely to hold any sway over the market as long Saudi Arabia continues to back the production cut deal as aggressively as it has done so far. With a very successful Aramco bond auction in the bag they will undoubtedly feel less inclined to act on renewed political pressure from the US. 

Following the murder of dissident journalist Jamal Khashoggi last year, the Saudis, in need of political friends abroad ,jumped when the US asked them to increase production ahead of the introduction of sanctions against Iran. What followed was the biggest slump in oil prices in years after the US surprisingly granted waivers to eight buyers of Iranian crude. As a result of being blindsided by the US and because of their need to support the price of crude oil, Saudi Arabia made a 180 degree turn: During a four-month period from December to March the kingdom’s production slumped from a record to a four-year low, well below the level they had agreed as part of the Opec+ deal to cut production. 
With geopolitical risks continuing to impact production from Venezuela and Iran and now also potentially Libya and even Algeria, the crude oil market is likely to remain supported until the price reachs a level that is satisfactory for Opec and Russia. President Trump put through a call to the Saudi Crown Prince Mohammed bin Salman yesterday to discuss Saudi Arabia’s critical role in ensuring Middle East stability while maintaining maximum pressure against Iran. With the Iran waivers due to expire on May 4 the oil market will be looking towards the US and the price of oil to gauge how aggressive Trump can afford to be at this stage. 

With Trump being very focused on (high) stock market prices and (low) gasoline prices the fact that US consumers are now paying the highest seasonal price for gasoline since 2014 could potentially limit his ability to tighten the screws on Iran. 

Later today at 14:30 GMT (CET+2 and ET-4) the EIA will publish its Weekly Petroleum Status report with the API and surveys both pointing to an increase in crude oil stocks and a continued drop in products. 
Monthly oil market reports from Opec today (just published today) and the IEA tomorrow will further cast some light on these two major forecasters' views on production and demand going forward. 

According to a Bloomberg news story today, the Opec update confirms market expectations of a plunge in last month's crude output, with the impact of planned cutbacks exacerbated by the political crisis in Venezuela. Opec oil output, it said, tumbled by 534,000 barrels a day to just above 30 million a day in March. It added that "If output remains at current levels, global oil inventories will decline sharply this quarter and next."

Opec report 

IEA report 

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.